Economics 1021A/B Study Guide - Quiz Guide: Economic System, Advantageous, Interpersonal Relationship

32 views4 pages

spectral

20 Jun 2020

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

mariameelguendou and 38538 others unlocked

ECON 1021A/B Full Course Notes

Verified Note

94 documents

Document Summary

The economy can be most simply understood as the means whereby goods and services are produced, exchanged and distributed among the members of a society. Income and wealth are generated through production, exchange and distribution. Incomes can be more or led evenly shared, which creates outcomes that are either egalitarian or markedly inegalitarian. Wealth can be used for immediate consumption, reinvestment (increasing the productive capacity of the economy) or wasteful purposes (associated with war or environmental destruction). Volume and value fluctuations of the income-generating economic activities cause either economic growth or economic decline. The most basic economic activity is providing for our basic needs: food, clothing, shelter. Therefore, farmers and fishers are more fundamental to economic activity than financiers. Economics studies these processes, analysing the production and exchange of goods and services, the distribution of income and wealth, the disposition of that income and wealth and the material influences on social progress.

Related Questions

WRITE a one-sentence summary of each paragraph!

The False Income-Inequality Narrative

BY JASON L. RILEY

Published in the Wall Street Journal on Sept. 29, 2015

An enduring theme of the Democratic presidential race has been income inequality, coupled with an enduring belief that America's affluent reached their status at the expense of the poor and the middle class.

Bernie Sanders speaks of little else on the stump. And when not busy dissembling on her handling of email correspondence at the State Department, Hillary Clinton will tell you that the deck is still stacked in favor of those at the top. If Joe Biden gets in, expect more of the same. The vice president is said to be contemplating a 2016 bid in large part because struggling middle-income families may have trouble relating to Mrs. Clinton on inequality given her high living since leaving the White House.

This theme, in any case, seems to resonate with voters, which is no huge shock in the sixth year of an economic recovery. Envy and resentment fuel class warfare and lackluster economic growth throughout the Obama presidency have made people less optimistic and more inclined to fault others for their circumstances. A Wall Street Journal/NBC News poll this week reports that four-in-five Americans âwere either angry because our political system seems to only be working for the insiders with money and power or anxious and uncertain. After all, the economy still feels rocky and unpredictable or both.

Liberals want to address income disparities through wealth redistribution by taking money from more productive people and giving it to the less productive in the name of fairness as the left defines it. They want to raise income taxes, expand the welfare state, lift minimum wages, and strengthen the bargaining power of unions. Mr. Sanders has been the most explicit about this, even going so far as to propose a wealth tax. Our economic goals have to be redistributing a significant amount of [wealth] back from the top 1%, the senator said in July.

In reality, the left has overstated the problem. And all the focus on divvying up existing wealth instead of creating more risks making matters far worse for the people they are trying to help and the country in general. To the extent that the expanding welfare state allows more people to live without working and therefore without earning income or developing their own human capitalâsupporters of the welfare state are contributing to the very income disparities they so much decry, writes economist Thomas Sowell in his new book, âWealth, Poverty and Politics.

Mr. Sowell is the author of more than 30 books over the past four decades, many having to do with what drives different social and economic outcomes among different groups in the U.S. and elsewhere. In his latest tome, he draws from this well of research to do what he has done so well for so long: question basic assumptions behind public policy and follow the facts where they lead him.

One common assumption is that proportionate or random outcomes are the natural order of things and that gaps or disparities are evidence of something wrong. In fact, huge disparities are the norm, not the exception, because the demographic, cultural, and political factors that influence the development of the human capital that makes people productive also tend to be unequal.

In 2013, only 9% of U.S. women with college degrees who gave birth were unmarried, versus 61% of women who were high-school dropouts and unmarried. Harvard's Robert Putnam reports that children from professional families will hear 19 million more words than their working-class peers before the first day of kindergarten.

These children don't have the same prospects. Equal opportunity, in the sense of being judged and rewarded by the same standards as others, cannot possibly mean equal life chances for children born and raised in these very different settings,writes Mr. Sowell. The fact that life is unfair is not the same as saying that a particular institution, or a particular society, is unfair.

The argument that social mobility is a thing of the past in the U.S. also is disputable. Longitudinal studies by the IRS and others that measure the progress of individuals over time show that the American dream is alive and well. One such paper, published by the Pew Charitable Trusts in 2012, measured whether a person has more or less income, earnings, or wealth than his or her parents did at the same age and concluded that the vast majority of Americans had higher incomes, while 50% had greater wealth.

In other studies, Pew has found generational stagnation but the authors have noted that it didn't apply to immigrants. If low-income immigrants can rise even when the native-born don't, writes Mr. Sowell, that strongly suggests that American society continues to offer opportunities to move up economically, but that not all groups make the same use of these opportunities.

Mr. Riley, a Manhattan Institute senior fellow and Journal contributor is the author of Please Stop Helping Us: How Liberals Make It Harder for Blacks to Succeed (Encounter Books, 2014).

redalpaca572

Hello, could I get some assistance with this question? Thank you.

Read the articles and discuss the problems of Economic Inequality in the U.S.economy, summarize key points and post in the Discussions area:

3) Inequality. On important but irrelevant facts

http://www.economist.com/blogs/freeexchange/2014/01/inequality-0?zid=293&ah=e50f636873b42369614615ba3c16df4a

Here is the article:

Inequality

On important but irrelevant facts

Should we care more about global or national inequality?

Free exchange

Jan 9th, 2014

by R.A. | LONDON

WRITING on Thomas Piketty's new book, Nicolas Goetzmann notes:

I think that Piketty missed something which might be important: Capital is mobile, workers are not, and in the end, we have this: Gini is reducing on a worldwide basis since 2005.

Scott Sumner adds:

I also like Goetzmann's comment about global Gini coefficients. Liberals should care about global welfare. Are they closet nationalists?

These sorts of remarks are common responses to those pointing out that inequality is soaring across the rich world, and they strike me as very problematic.

It is true, of course, that inequality globally has been falling. And it is absolutely right to say that this trend is hugely important and is contributing to a massive rise in global welfare. We should all be ecstatic about it. But in no way does that development excuse us from caring about and worrying about national income inequality, for a few very important reasons.

The first is that it implies, without ever making an actual argument, that efforts to reduce income inequality within rich economies must necessarily slow reductions in global inequality. Why bring up the global statistic unless you are worried that expressions of concern about national inequality are likely to undermine the global trend? Some egalitarian-minded policies might, of course, but many others would not. I'm not sure why someone would want to stake out the position that subsidized pre-school for disadvantaged children is unnecessary, for example, because global inequality is falling.

Second, while we all should care about welfare globally, we should also recognize that the political salience of the issue is exclusively national. To a first approximation, America's Congress does not care in the least about the status of global inequality. There are no sitting congresspersons from Burundi. National inequality, by contrast, is highly politically relevant. Catch-up in the emerging world has a lot to do with innovation and openness in the rich world. If soaring national inequality undermines political support for policies that facilitate innovation and openness, that's a problem for everyone. It's a pretty basic political economy point that globalization will continue while national polities feel that globalization is broadly in their interest. People who like globalization should therefore be very, very concerned when it doesn't appear to be generating broad-based growth in rich countries.

The third is that inequality is growing within emerging markets. One might be inclined to argue that we shouldn't worry too much about that, since rising inequality is a classic side-effect of rapid development which should go away as emerging economies mature. But one of the most important points in Mr. Piketty's book is that the conventional wisdom that development naturally increases and then reduces inequalities is wrong: the data show that there is no systematic tendency for inequality to fall as an economy matures.

And so we should note that the backlash to globalization and development might well come from within emerging markets, and indeed one would have to be fairly cut-off from the news to miss populist expressions of dissatisfaction across the biggest emerging economies over the past couple of years. What's more, Mr. Piketty's work suggests that as the process of catch-up slows inequality trends within countries will begin to dominate inequality trends across countries, leading global inequality to rise once more.

So yes, global inequality has been falling. That is no reason for people of any ideological persuasion to ignore very worrying trends in national distributions of income and wealth.

orangegnu267

indigoscorpion676

Economics 1021A/B Study Guide - Quiz Guide: Economic System, Advantageous, Interpersonal Relationship

ECON 1021A/B Full Course Notes

Document Summary

Get access

Related Documents

Economics 1021A/B Study Guide - Quiz Guide: Informal Sector

Economics 1021A/B Study Guide - Quiz Guide: Market Economy, Capital Market, Social Capital

Economics 1021A/B Study Guide - Midterm Guide: Externality

Related Questions